OmiseGO (OMG) – Unbank the Banked
OmiseGO enables real-time, peer-to-peer value exchange and payment services agnostically across jurisdictions and organizational silos, and across both fiat money and decentralized currencies.
There is a fundamental coordination problem amongst payment processors, gateways, and financial institutions. That coordination problem causes transfers between those institutions to be slow and costly.
An imperfect solution today exists in the form of a clearinghouse, which manages the interchange, usually via a messaging network with either a central counterparty clearinghouse. Examples include FedWire, CHIPS, SWIFT, consumer card payment networks, NSCC/DTCC, OCC, and ACH. These centralized networks allow for the controlling entity to arbitrarily change the mechanisms, which result in significant amount of transaction costs via information costs, due diligence, and contractual enforcement between all parties. Under this “solution” users pay high fees and often must wait 1-5 business days for their transactions to settle.
OmiseGO is building a decentralized exchange, liquidity provider mechanism, clearinghouse messaging network, and an asset-backed blockchain gateway. It uses Proof of Stake to enable a decentralized exchange within other blockchains and between multiple blockchains directly without a trusted gateway token.
OmiseGO offers a platform to convert and spend any form of currency (fiat, crypto, advantage points, etc). For example, users will be able to send money from their PayPal accounts to their Venmo accounts through a decentralized exchange for a relatively smaller fee than what they would currently pay to fulfil that sort of transfer.
People who do not have bank accounts will have access to the platform with a smart phone or an internet connection, which enables users to make financial transactions even if they are not registered at a bank. Only 27% of Southeast Asians have bank accounts but over 37% own a smartphone. With OmesiGO, people who have smartphones but do not have bank accounts will have access to certain financial services.
Some elements of the platform are restricted under Know Your Customer laws, so anonymous traders or users without bank accounts will not have full access, but some access depending on which currency or type of transaction they want to use.
OmiseGO is in a unique position to provide this type of financial platform because its parent company, Omise, already provides payment services to thousands of business users in Asia. The image below describes Omise’s company mission as well as some of their featured statistics regarding their company and the proliferation of their payment platform.
It should be known that Omise is NOT the same thing as OmiseGO. However, it is assumed that both teams will share insights and that Omise will ultimately adopt OmiseGO’s platform once it is fully operational. Omise and OmiseGO share the same CEO and COO, Jun Hasegawa and Ezra Don Harinsut, so this seems like a safe assumption.
In addition to its ties to Omise, some of the most prominent cryptocurrency figures advise OmiseGO. Advisors include but are not limited to Vitalik Buterin (founder of Ethereum), Joseph Poon (Co-Author of the Lightning Network), Dr. Gavin Wood (Co-founder of Ethereum), Julian Zawistowski (founder of Golem)
You made have noticed we wrote “Omise will ultimately adopt OmiseGO’s platform once it is Fully Operational. The problem is that the platform is not operational. OmiseGO’s major obstacle is implementing a secure and scalable proof of stake system. The sum of their team of advisors suggests that OmiseGO has the potential to solve that problem. OmiseGO wants to solve their scalability issue through their Plasma platform but their whitepaper admits to heavily rely on the Ethereum blockchain. Their connection makes it seem as if Ethereum’s Casper proof of stake scalability solution could be used instead of Plasma. Either way, there is a connection between the teams behind Ethereum and OmiseGO, so OMG’s value will appreciate if the Ethereum developers discover any breakthroughs.
Omise has key partnerships that should tie into the success of OmiseGO so we are going to mention some of Omise’s partners although those partners may not directly advocate for the OmiseGO cryptocurrency.
On February 21st 2018 Omise and the Thai government signed a Memorandum of Understanding which will help the two parties collaborate to develop a national digital identity verification system along with an online payments portal. Note that Vitalik Buterin was present during Omise’s meeting with the government, which makes connections with OmiseGO and cryptocurrency easier to believe.
As of September 2017, McDonalds Thailand partnered with Omise and uses Omise’s payment platform for online and mobile orders. McDonalds is one of the many businesses that uses Omise’s payment platform that serves as an existing infrastructure for the OmiseGO platform to potentially take over. Because Omise already has such a large and growing payment processing infrastructure in place, it makes it the proliferation of something like OmiseGO easier to believe in than other cryptocurrencies trying to solve the same problem.
Blockwolf sees a lot of similarities between OmiseGO, Ripple, and Stellar Lumens. Each cryptocurrency has a protocol or an infrastructure already in place and an accompanying cryptocurrency that is somewhat related. A difference behind OmiseGO is that it uses a Proof of Stake consensus method and has a more decentralized transaction verification process. Additionally, OmiseGO will not act as a custodian of cryptocurrencies and will instead be locked in smart contracts.
What is the point of the OmiseGO token (OMG)?
The transaction fees required to operate within the network are paid in OmiseGO tokens (OMG). Additionally, users that verify the transactions on the network will be paid out in OmiseGO Tokens.
OmiseGO tries to solve a critical problem regarding the lack of coordination and fees associated with financial service providers. Its main obstacle is its unfounded technology of a secure and scalable proof of stake consensus method. With support from Omise and Ethereum, it has the team and infrastructure to potentially find that solution, but it is a question mark of high risk and high reward. We feel more comfortable investing in OMG than its competitors but that does not necessarily mean that one should only invest in one payment processing cryptocurrency.